A “class action” is a civil suit brought by one or more people on behalf of themselves and others who are similarly situated. In other words, the others are in a substantially similar circumstance where the common issues are the most critical to the lawsuit. For example, if many consumers are injured as a result of an allegedly defective product, the principal issue will be whether the product caused the injury. Some examples of class actions are those brought against the manufacturers of allegedly defective or hazardous products, such as asbestos, certain vaccines, Agent Orange, tobacco, and breast implants. Next comes the question of how badly each party was injured be heard.
Class actions may also be brought on contracts. For example, all customers of a particular Internet service provider could claim damages if it changed its rates without adequate capacity to handle the increased traffic.
Additional areas in which class actions help protect consumers include debt collection, abusive mortgage lending, credit reporting, non-payment of overtime, and securities claims. For example, suppose a company issues an allegedly false press release and the stock goes from $10 to $15 but when the truth comes out the stock falls to $6 per share. A class action could be brought on behalf of all the stockholders who purchased shares after the company issued deceptive news and before the truth came out. Each member of the class allegedly suffered some harm as a result of the alleged wrong. The damages each member of the class will vary — someone who bought 1,000 shares at $15 each would be 10 times more impacted than a person who bought 100 shares at $15 — but the critical issue is whether the press release was deceptive, and that is common to all class members.
Typical class actions involve hundreds, thousands or millions of people who have comparable claims. Class action “certification” permits all claims to be heard in a single trial.
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